20 days ago • Posted by Jasper Lawler
Quarter-end rebalancing overhangs market after bond rout in Q1
JPMorgan estimates that balanced mutual funds need to sell $136 billion of equities to buy bonds to meet allocations. The rout in fixed income along with a strong quarter from equities is leading to significant dislocations.
Estimates from Bank of America say US private pensions alone will need to shift $88 billion from equities into bonds. Sovereign wealth funds will be reallocating upwards of $100 billion.
The peak of rebalancing is usually around the 25th of the month, which is today.